Are contracts made via email enforceable? You betcha—although not in all cases.
The case, St. Louis Union Station Holdings, Inc. v. The Discovery Channel Store, Inc. (which, incidentally, involved real estate that I can see from my office), related to a dispute over the settlement of a breach of lease action. Discovery Channel leased space from Union Station where it operated a retail store. It ceased doing business at the location in August 2007 and thereby breached its lease. Union Station sued shortly thereafter to enforce the lease.
Was There a Binding Agreement?
In September 2007 the following email exchange took place between Union Station’s general manager, Byron Marshall, and Tom Davidson, a real estate professional representing Discovery Channel:
I am aware that you have had conversations with both my colleague, John Fee as well as our attorney, Michael Wolff representing St. Louis Union Station regarding the lease termination of Discovery Channel Store, and thus after most recently speaking with our ownership, our owner will agree to counter your previous offers with $220,000.00.
[Reply from Davidson]:
Your lease termination counteroffer of $220,000 “all inclusive and as is condition” is accepted for Discovery Channel St. Louis Union Station. Kindly prepare the lease termination agreement and e-mail it to me for processing and review by Discovery.
A few months later Discovery Channel filed a motion to enforce the settlement, and Union Station argued that it had not agreed to a settlement. Union Station contended that there was no offer and acceptance, and therefore no meeting of the minds necessary to form an enforceable agreement. The appeals court disagreed and stated:
The email exchange between Marshall and Davidson provides clear and convincing evidence of an offer and acceptance. Marshall communicated to Davidson the following: “[O]ur owner will agree to counter your previous offers with $220,000.00.” This constituted a valid offer. Davidson’s response stating, “Your lease termination counteroffer of $220,000 ‘all inclusive and as is condition’ is accepted for [Discovery Channel],” effectively accepted Marshall’s offer.
The court further stated that the e-mail exchange included all material terms to settle the suit and that there was a meeting of the minds.
What About the Statute of Frauds?
Union Station argued that even if the email exchange constituted a contract, the agreement was not enforceable because the email exchange did not fulfill Missouri’s statute of frauds, which requires certain categories of agreements including real estate leases—or a memorandum of the agreement—to be in writing. The court held that the statute of frauds did not apply because the agreement at issue related to the settlement of a dispute rather than a lease, although the underlying dispute related to a lease.
Thus, the court held that the statute of frauds did not apply and enforced the contract which was established via email.
In a later post I’ll discuss the effect of the statute of frauds on electronic contracting.